The curvilinear relationship between digitalization and firm's environmental performance

This study explores the relationship between home country digitalization and firms' environmental performance. We use panel data with 16,926 observations of 5026 firms from 47 countries in 10 sectors, collected from Thomson Reuters Eikon between 2014 and 2019. In this study, we capture three dimensions of home-country digitalization: knowledge, technology and future readiness. Our results reveal the existence of an inverse U-shaped relationship between each dimension of home-country digitalization and firms' environmental performance. Our analysis showed that at first stage, home country digitalization has a positive indirect impacts on enviroinmental performance, e.g. enhanced energy efficiency and resource management, but later, an excess of digitalization causes "rebound effect" with negative consecuences on environment, e.g. high electricity consumption, radioactivity, or e-waste.